2002-VIL-398-MAD-DT

Equivalent Citation: [2003] 260 ITR 655, 191 CTR 177, 141 TAXMANN 38

MADRAS HIGH COURT

Tax Case No 502 of 1996 .

Date: 05.09.2002

COMMISSIONER OF INCOME-TAX

Vs

MAPS TOURS AND TRAVELS.

BENCH

Judge(s)  : R. JAYASIMHA BABU., K. RAVIRAJA PANDIAN.

JUDGMENT

The judgment of the court was delivered by

R. JAYASIMHA BABU J.-The question referred to us at the instance of the assessee is,

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in directing that the assessee is entitled to depreciation in respect of the ten motor cars purchased on March 30, 1989, and March 31, 1989, even though the assessee had not proved the fact that the assets were used for the purpose of business during the relevant accounting year?"

The assessment year is 1989-90.

The assessee is a firm engaged in the business of renting out cars. It had purchased ten motor cars on March 30, 1989, and March 31, 1989. The formalities with regard to the registration of the vehicles, payment of road tax, etc., had not been completed before the end of March 31, 1989. The assessee also did not produce any proof of having used those cars for its business before the end of March 31, 1989.

The assessee's claim for depreciation of these vehicles was negatived by the Assessing Officer. That order was affirmed by the appellate authority. The Tribunal, on further appeal, however, has held that depreciation is to be allowed by observing that the assessee as a businessman would have definitely used the cars though the same was purchased on the last day of the accounting year. No evidence of any such use has been placed before the authorities or the Tribunal by the assessee.

The Supreme Court in the case of Liquidators of Pursa Ltd. v. CIT [1954] 25 ITR 265, has held, inter aria, that the words, "used for the purpose of the business" obviously mean "used for the purpose of enabling the owner to carry on the business and earn profits in the business". Section 32 of the Income-tax Act provides for depreciation being allowed in respect of any building, machinery, plant, etc., "owned wholly or partly by the assessee and used for the purposes of the business or profession". In this case, as the cars were bought on the last day of the accounting year, had not been registered for being brought on roads, and there was no evidence of having used those cars before the end of the accounting year in the business of the assessee, the Tribunal was clearly in error in holding that the assessee was entitled to depreciation in respect of these vehicles.

The question referred to us is answered in favour of the Revenue and against the assessee.

 

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